Summer-Mid-Year Estate Planning Review

Coauthored by Kristine M. Scott, Estate Planning Associate

School is out, the kids are home, and you’re traveling to new places and spending time with your family. It’s summer time! While going out on the boat sounds like a good idea, try to make time to take a fresh look at your estate plan before things get busy with school activities and fall events.

Life changes every day, and your estate plan should evolve with your life. Keeping this in mind, here a few ideas to help guide you during your review.

Review Your Trust or Will

If you haven’t looked at your trust or will in the past year or two, now is a great time to do so. Over the course of a year or two, so much can change—financial holdings, family dynamics, marital status, birth of children or grandchildren, and changes in your career—all of which may require changes in your estate planning.

For example, with the massive 2017 tax law changes, consider modifying or eliminating estate tax formula provisions in your trust or will in light of the (temporarily) increased estate tax exclusion. Consider restructuring your business to take advantage of the new business deductions.

If you’re in a state with high income taxes and will be caught in the new deduction limits, consider forming protective trusts in other states (such as Florida) which have no income tax. Or you may have welcomed a new family member, calling for a trust.

Review the People Appointed to Important Roles

The person(s) named under your powers of attorney, as personal representative (executor) in your will or successor trustee under your trust play a vital role both during your life if you become incapacitated and after your death. Because of this, reevaluating whether the persons named are still the best choices is a must.

If you have minor children, look at who you have chosen as their guardians following your death. Are they still the right fit for your children?

Some of your assets may have beneficiary designations, like life insurance proceeds or retirement accounts, or may have joint ownership. These are generally not controlled by your will or trust because they pass directly to the named beneficiary(ies). They are often forgotten when changing your estate plan, and this can lead to huge disconnects in your overall plan. And certain life events may call for immediate changes in these beneficiary designations.

For example, say you designate your wife Sally as beneficiary of your IRA established in another state. Four years later, you get divorced and die in a car accident without changing the IRA beneficiary. Regardless of the fact that Sally is no longer your wife, she likely inherits the IRA, because a divorce does not automatically revoke this existing designation. The same is true of survivorship rights on a joint bank account.

Thus, it is important to revisit your designations every so often to make sure that the beneficiaries you want to receive those assets are in fact named.

Many people are under the misconception that beneficiary designations are automatically revoked in a divorce; while this may be true for contracts governed entirely by Florida law, many IRAs and tax-deferred accounts are governed by other states’ laws or even Federal law, and this automatic revocation does not apply.

Make Sure Your Trust Is Properly Funded

This is THE most important task in achieving probate avoidance via a revocable living trust. If none of your assets are titled in the name of the trust and/or the trust is not named as beneficiary, those assets may have to go through probate.

Clients should consult with us before naming a trust as beneficiary of an IRA to ensure the trust contains the proper language to minimize taxes on the IRA following your death.

Have Questions or Concerns?

If reading through the above has sparked questions or concerns with your existing documents, please call us at 904-807-2183. Bringing your attorney up to date on your life situation will allow us to recommend what changes, if any, need to be made.